4. Mining, social movements and regional development

Question 1

What is the Linkage Development Model (Morris et al, 2012) ?

Answer 1

Basic Idea: Externalization of non-core competencies in the extractive industries would open opportunities for win-win linkages

Seen as an evolutionary process of knowledge & tech capabilities accumulation among local supply firms that follows 3 steps:

1. Industrial policy should promote linkages related to basic tasks where the country has labor cost advantages
2. linkages gain importance in building globally competitive mining industry
3. then policy should focus on strategic and knowledge-intensive linkages

Question 2

What types of linkages exist?

Answer 2

Hirschman (1981) differentiates:

Backward linkages -> lead to multiplier effects through input supplies (an industry requires substantial intermediate inputs from other industries for its production)

Forward Linkages -> lead to multiplier effects through the processing of commodities (one industry is connected to others to which it sells its outputs)

Consumption Linkages -> lead to multiplier effects in local demand from the incomes earned in the commodity sector (BUT this is weak when most products and services are imported)

Fiscal Linkages -> ability of states to tax the exploitation of commodities

Question 3

What the heck are linkages?

Answer 3

In mining:

Linkages are seen as a basis for economic development

Hirschman (1981) defines linkages as “one thing leading to another’

Theoretically, governments could stimulate the creation of linkages in various mining sectors, but in practice, it’s hard to know where to invest. Linkages do exist internationally, but they don’t really materialize within the local economy and community

Question 4

What is the traditional enclave thesis?

Answer 4

Enclave structure is traditionally seen as one with weak productive linkages to local firms, foreign ownership of capital, and exporter of goods with low or no value-added - in other words, there is limited scope for creating production linkages and tech spillovers in the host country (Singer, 1950)

Because mining has more of an enclave-like structure (commodity extraction, in general, is seen as an enclave structure), linkages are unlikely to be achieved

Question 5

Can we find linkages in the mining sector?

Answer 5

Breul & Revilla (2021):

In recent decades, extractive industries have undergone an organizational restructuring process:

• outsourcing non-core activities to specialized contractors
• locating contractors close to the operation
• in this way, creating opportunities for production linkages (BUT, these linkages need to be developed, nurtured, and promoted through physical and social infrastructure, and a favorable policy environment)

Many Global South resource-rich countries lack the above-mentioned factors, and so they can’t fully take advantage of production linkages in the mining sector.

Moreover, extractive companies fragment their business activities to exploit different factor endowments across the regions.

Atienza et al. (2018):
They say that until recently, most empirical analyses on mining linkages are based on input-output tables and therefore don’t take into account the spatial consequences of increasing outsourcing. The previous approaches consider mining regions as isolated units instead of nodes in a global network.

They look at 3 types of indicators to see if there are linkages in the Chilean mining supply network:

• study the spatial spread of the mining supply network
• calculate the evolution of mining backward and forward linkages across regions
• analyze the functional role each region plays in the supply network

They conclude that most multiplier effects are concentrated in main urban areas specializing in financial and other services; linkages are therefore not sufficient for the mining region development when we look at the subnational scale. The possibility of a win-win depends on local strategic assets such as qualified labor and absorptive capacity.

Question 6

What is rural territorial development (RTD) and does it provoke social mobilization?

Answer 6

Bebbington et al. (2008):

Rural development requires productive and institutional modernization, as well as conscious efforts to articulate these modernization processes with a conception of space that recognizes linkages between rural and urban development
Connects economic growth with institutional arrangements in ensuring that the rural poor are able to participate in the growth process

!!! Social mobilization occurs as a response to the threats (or perceived threats) of particular forms of economic development to the security and integrity to the lives and livelihoods and the ability of a population in a given territory to control what it views as its own resources
- occur in response to exploitation and dispossession (both understood as loss in quantity of people’s assets, e.g land and their quality, e.g air pollution)

Rural development is highly contested, because on the one hand it would create jobs and raise the income level of a particular community, however more often than not, it happens in the interest of the multinational corporation working close with government elites.

Question 7

What is Artisanal and Small Scale Mining (ASM) and how is it developing in Sub-Saharan Africa (SSA)?

Answer 7

ASM - low tech, labor-intensive mineral extraction, and processing

Approx. 20 million people are employed in ASM in SSA (mainly unlicensed or “informal”) and around 100 million people are dependent on the sector

Why is there persistent informality?

• dualists say that informal activities are marginal and serve as safety nets for the poor
• structuralists view informal work as subordinate to the formal economy
• legalists say that informality is a response to bureaucracy

POLICY IMPLICATIONS:
Some scholars believe that the key to alleviating poverty and preventing conflict between dual economies is to expand property rights systems to absorb the informal economy.
Others believe that formalization should proceed as a process, not a product (miners could view it as a threat if they cannot afford the cost of formalizing)

Since the 90s, there have been attempts in SSA to formalize the mining sector but it was not aligned with miners’ needs (permit fees too high, e.g. in Niger, fees for formalization are 9 times a miner’s yearly salary)

Question 8

The graph - Dif trajectories of linkage development (can’t attach pics, sorry)

Answer 8

Speeding up and slowing down linkage development:

• linkage development in the resource sector occurs as a natural outcome of market forces leading to development of (local) linkages
• linkage development may speed up or slow down as a result of state policy
• the nature and extent of local linkages reflects a combination of factors intrinsic to the sectors and the character of global competition as well as contextual factors
• these intrinsic/contextual factors can speed up or deepen linkages through the operation of market forces over time; they may also reflect factors which may have impeded/led to a shallowing of this market led process of linkage development
• linkage development is a function of time - duration of resource extraction activity

Breadth of linkages - proportion of inputs sourced locally or outputs produced locally
Depth of linkages - how “thick” linkages are; their domestic value added